Lesson 3 of 104:053 Sources
Risk : Reward ratio
Recorded. Publishing soon
Educational content, not investment advice. Nour explains how markets work. She never tells you what to buy or sell.
The risk:reward ratio compares the distance to your target with the distance to your stop.
- Break-even win rate = risk ÷ (risk + reward): 1:1 → 50%, 1:2 → about 33%, 1:3 → 25% (before costs).
- 10 trades at 1:2 with 4 wins: +$80 − $60 = +$20.
- Risking $20 to make $10 needs about 67% wins just to break even.
- Targets must be realistic and come from the chart. Don't widen stops or cut winners early — that flips the ratio.
Quick check
Three questions. Pick an answer to see why.
1.Stop 20 pips, target 40 pips. What is the ratio?
2.At 1:3, roughly what win rate breaks even before costs?
3.Which habit secretly flips a good ratio?
Sources
Every fact in this lesson is backed by the sources below.
- 1.CME Group Education — Risk Management and Your Trade PlanRisk/reward ratio as a way of looking at risk within the trade plan
- 2.MetaQuotes — MT5 Help: Strategy Tester ReportAverage profit trade / average loss trade definitions used to evaluate results
- 3.CME Group Education — The 2% RuleFixed $ risk per trade used in the running example
Educational content, not investment advice. Risk warning: trading forex, CFDs, gold and crypto carries a high level of risk and may not be suitable for everyone. You can lose more than you put in. Souq Daily is an education platform. Nothing here is investment advice, a recommendation or an offer, and past performance does not predict future results.